US Court order could force online DVD distributor to shut down

The Motion Picture Association of America (MPAA) has won a US court ruling that could force an online video streaming service to shut down.

A California district court ruled to award the MPAA, the trade group which represents the six major Hollywood film studios, a preliminary injunction against Zediva. Under the terms of the court ruling the parties must meet on or before 8 August to attempt to agree the terms of the injunction.

Zediva’s service allows customers to "rent" recently released DVDs over the internet. Zediva purchases copies of DVDs, plays them in DVD players and uses technology to stream the films to customers over the internet. The company gives customers control over when the DVD starts and stops. The copies of the DVDs never physically leave Zediva's premises.

The MPAA argues that Zediva’s service should be shut down and is seeking $150,000 from Zediva for each work it alleges has been infringed. The outcome of the case will be determined in a full trial. The court ruled to impose a preliminary injunction against Zediva after determining that the company is in breach of the MPAA’s copyright.

"In this case, [Zediva] are violating [the MPAA's] exclusive right to publicly perform their Copyrighted Works by transmitting those Copyrighted Works to the public over the internet, without a license or [the MPAA's] permission, through the use of [Zediva's] service," the judge said in his ruling (12-page / 49KB PDF).

Zediva had argued that its service offers "DVD rentals" rather than the transmission of films, meaning that once it had bought a lawfully made DVD it was allowed to rent it out to its customers and was not breaching the US Copyright Act. The judge disagreed and ruled that Zediva's service amounts to "transmission of performances".

In the US for an injunction to be granted the party seeking the order must establish that its case is likely to succeed, that it would suffer irreparable harm if the injunction is not granted, that the hardship it would suffer in the absence of the injunction would be greater than that suffered by the opposing party if the injunction were granted and that the injunction is in the public's interest. The judge held that the MPAA had established all four grounds.

The judge's decision was described by a MPAA spokesman as "a great victory for more than 2 million American men and women whose livelihoods depend on a thriving film and television industry," according to a report by CNET news.

Zediva has vowed to continue its fight and described the ruling as "a setback for the hundreds of thousands of consumers looking for an alternative to Hollywood-controlled online movie services."

"Zediva intends to appeal, and will keep fighting for consumers' rights to watch a DVD they've rented, whether that rental is at the corner store or by mail or over the Internet," a Zediva spokesman said, according to CNET.

Last month the High Court of England and Wales granted an injunction against the UK's largest internet service provider, BT, forcing it to block access to Newzbin 2. The Newzbin 2 website aggregates links to illegally-copied films, music and computer games.

The Newzbin 2 decision has been widely criticised and the judgment was described as setting "a worrying precedent for internet censorship," by Loz Kaye the leader of the Pirate Party UK.

Zediva, the video service that attempted to build a business by exploiting loopholes in copyright law, suffered a serious setback today when a federal judge granted a preliminary injunction against the service.

U.S. District Judge John Walter has ruled that Zediva violates copyright law and granted a preliminary injunction motion made by the Motion Picture Association of America for Zediva to be shut down. The judge is waiting a week for a legal technicality before officially issuing the injunction, but Zediva's fate is sealed.

Zediva billed itself as a DVD rental service that enabled users to rent physical DVDs and DVD players, both of which would never leave the company's facilities. The secret sauce was that customers would control the DVD players via the Internet. "It's just like a DVD player with a really long cable attached," was the way the company often described itself. As a rental service, Zediva argued that it was immune from copyright claims. The judge disagreed.

"Judge Walter's decision is a great victory for the more than 2 million American men and women whose livelihoods depend on a thriving film and television industry," the MPAA said in a statement.

A Zediva spokesman said the company plans to carry on the fight.

"Today's ruling represents a setback for the hundreds of thousands of consumers looking for an alternative to Hollywood-controlled online movie services," Zediva said in a statement. "Zediva intends to appeal, and will keep fighting for consumers' right to watch a DVD they've rented, whether that rental is at the corner store or by mail or over the Internet."

In April, I wrote that lots of better loophole-business models have come along that appeared to have a better claim on legality than this operation and those too were sued into oblivion. Some of those include RealDVD and ivi.TV, a streaming-video service.

Zediva's argument that the service isn't really transmitting copyrighted movies over the Internet but is more akin to one person lending a physical DVD to another--just using the Web to accomplish that task--was rejected by Walter.

"The Zediva service transmits performances of Plaintiffs' copyrighted works 'directly under the language of the statute,' Walter wrote.

Walter added: "Defendants' service threatens the development of a successful and lawful video-on-demand market and, in particular, the growing internet-based video-on-demand market. The presence of Defendants' service in this market threatens to confuse consumers about video-on-demand products, and to create incorrect but lasting impressions with consumers about what constitutes lawful video-on-demand exploitation of Plaintiffs' copyrighted works."